China National Offshore Oil Corp (CNOOC) is taking a controlling stake in a $5.5 billion biofuel project, one of the project partners said Thursday (19/7/07), according to Dow Jones Newswires.

CNOOC Group, Indonesia’s Sinar Mas Group and Hong Kong Energy (Holdings) Ltd in January signed a letter of intent to jointly develop biodiesel from crude palm oil and bioethanol from sugar cane or cassava in Papua and Kalimantan. The shareholding structure had not been disclosed.

CNOOC Group holds a 51% stake in the project, the company's first biofuel investment overseas, according to Chen Libo, executive director of HKC (Holdings) Ltd, the parent of Hong Kong Energy.

Sinar Mas holds 39% of the Indonesian project, while Hong Kong Energy holds the remaining 10%, Chen added.

Based on the shareholding structure, CNOOC Group will shoulder $2.8 billion of the total investment cost, Sinar Mas $2.15 billion and Hong Kong Energy the remaining $550 million.

Chen said he hopes to start planting the land before the end of this year, but he declined to say when the project will start producing.

According to a statement issued by Sinar Mas in January, the three companies will develop the project in three phases and over eight years.

Regional governments in Papua and Kalimantan have already reserved around 1 million hectares of arable land for the project.

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